Blackstone Irons Out Views on Commodities

Blackstone may be mining the world for deals but for the time being it’s staying out of commodities.

On a call to discuss the firm’s blockbuster first quarter earnings, President Hamilton “Tony” James said the firm had “identified commodities as an interesting area,” but that the firm was unlikely to move on anything in the short term.

Though buyout firms have traditionally avoided the highly volatile asset class, some newly-formed firms, as well as established private equity players, have sought recently to take advantage of asset sales from some of the world’s largest miners.

But that type of deal doesn’t hold much appeal to Blackstone either, according to Mr. James.

“Being in a trading business, you miss out on something that being in the physical business gives you,” he said.

Beyond the mechanics of participating on the asset or trading side, Mr. James expressed concern about finding the right people with whom to do business.

“Finding the right group with the right culture, standards of excellence and integrity is not always easy,” he said. “They’re global, in strange parts of the world. We have to be careful how we do business, where we do business and with who we do business.”

So where will Blackstone be deploying capital?

Well, don’t expect it to be in large buyouts.

“Given where values are,” Blackstone doesn’t expect large buyouts, such as its recent $5.4 billion deal for Gates Gobal, to be a large portion of deal flow in the short term.

“We’re trying to do things that are a little more creative, a little off the beaten track,” he said. “That’s less common with large buyouts.”

About Private Equity Beat

Produced by the editors of Dow Jones LBO Wire, Private Equity Analyst and Private Equity News, Private Equity Beat provides an inside view into the latest buyout deals and emerging trends in the world of private equity. Staff writers give insight and perspective on the flow of private capital on Wall Street and around the world. Write us at vweditor@dowjones.com. For more information on Dow Jones products covering private equity and other financial markets, go to http://pevc.dowjones.com.